EXHIBIT 10.12


 


EMPLOYMENT AGREEMENT


 


Agreement made
effective as of the 23rd day of April, 2004 by and among Boston
Restaurant Associates, Inc. (the “Company”), a Delaware corporation with its
principal place of business in Saugus, Massachusetts and George R. Chapdelaine
(the “Employee”) of Essex County, Massachusetts.


 


WHEREAS,
Employee has served as President and Chief Executive Officer of the Company
since April 1994;


 


WHEREAS, in
order to assure itself of the benefits to be obtained from the special talents
and abilities of Employee resulting from Employee’s involvement and knowledge
of the business of the Company and relative to the continued operation of the
business of the Company, the Company desires to continue Employee’s employment
as an executive officer of the Company on the terms and conditions contained
herein;


 


NOW,
THEREFORE, in consideration of the mutual covenants and promises herein
contained, the receipt and sufficiency of which is acknowledged, and intending
to be legally bound, it is hereby agreed by and between the parties as follows:


 


1                                          Employment.  The Company hereby continues to employ
Employee as President and Chief Executive Officer of the Company.  Employee shall have general management and
control of the business, affairs and property of the Company and its direct and
indirect subsidiaries and shall perform such duties of such offices as are
provided for in the bylaws of the Company subject to the general supervision
and direction of, and any policies and procedures established from time to time
by, the Board of Directors of the Company. 
Employee shall also serve as a director of the Company.  Employee hereby accepts such employment.


 


2                                          Term.  Employee’s employment pursuant to the terms
of this Agreement shall commence on the date hereof and shall continue for a
period of two (2) years or until earlier terminated in accordance with the
termination provisions provided for in Section 10 herein (the “Initial
Term”).  Unless earlier terminated in
accordance with the termination provisions provided for in Section 10 herein,
Employee’s employment pursuant to this Agreement shall automatically renew for
additional periods of one (1) year each (each an “Additional Term”) at the
expiration of the Initial Term and at the expiration of each Additional Term
(the Initial Term and Additional Terms are collectively referred to herein as
the “Term”).


 


3                                          Salary.  (a) The Company shall pay Employee, during
the Term of this Agreement, an annual salary of $232,500 (which amount
represents Employee’s existing salary as adjusted for the Consumer Price Index
as described below for the first year of the Term) payable in installments no
less often than monthly.  A salary
review shall be conducted by the Compensation Committee of the Board of
Directors of the Company no later than twelve (12) months after the
commencement date of this Agreement with yearly reviews thereafter on the
anniversary date of such first review (each a “Review”).  In connection with such Review, the
Compensation Committee may increase, but (subject to Section 3(b), below) not
decrease, the then current salary of Employee by such amount as it determines,
in its sole discretion, provided however, that effective as of the date of each
Review, Employee’s then current salary shall be adjusted to an amount at least
equal to Employee’s then


 

















 


current salary multiplied by a
fraction, the numerator of which shall be the Consumer Price Index (as
hereinafter defined) for the month immediately prior to the applicable Review
date, and the denominator of which shall be the Consumer Price Index for the
month that is twelve months prior to the month used as the numerator.  The Consumer Price Index referred to above
is the Consumer Price Index of the United States Bureau of Labor Statistics
(Urban Wage Earners and Clerical Workers, U.S. City Average, all items) on the
1982-84 equals 100 standard.


 


(b)                                 Employee
acknowledges and agrees that the annual salary is subject to reduction in the
event of a general reduction in executive salaries of the Company due to budget
restrictions.


 


4                                          Automobile
During the term of this Agreement, Employee shall be paid the sum of $1,000
plus the amount necessary to pay insurance and parking each month to defray the
cost of the leasing or purchasing of, and gas, mileage, insurance, repairs and
parking for one automobile for his use in connection with his employment
hereunder.


 


5                                          Bonus.  Following each Review date but in no event
later than one hundred (100) days after the Company’s fiscal year end, Employee
shall be paid a performance bonus based on the performance criteria determined
each year by mutual agreement of the Compensation Committee of the Company’s
Board of Directors and the Employee. 
The target bonus shall be equal to 25% of Employee’s annual salary, with
the actual amount of such bonus, if any, to be measured by the extent to which
Employee meets the performance criteria agreed to for each particular year of
the Term.


 


6                                          Expenses.  Employee shall be reimbursed for all
reasonable expenses incurred by Employee in connection with his employment
under this Agreement, including expenses for travel and entertainment.  Employee shall furnish the Company with the
appropriate documentation relating to such expenses.


 


7                                          Fringe
Benefits.  Employee shall be
entitled to the fringe benefits generally made available to employees or
officers of the Company of standing comparable to that of Employee, on the same
or more favorable terms and conditions as such benefits are made available or
furnished to those employees or officers. 
The Company shall continue, at its cost, health insurance for Employee
during any Severance Period.


 


8                                          Vacation.  Employee shall be entitled to at least five
(5) weeks of paid vacation during each year of employment with the Company,
which vacation may be taken by Employee at any time at the sole discretion of
Employee.


 


9                                          Full-Time
Duties.  Employee shall devote all
of his business time, attention and efforts necessary and appropriate to
fulfill his duties hereunder.  This
provision shall not serve to prevent Employee from engaging in investment
activity that is passive in nature.


 


10                                    Termination.


 


(a)                                  Termination
by the Company.  At the election of
the Company, this Agreement shall terminate and any and all rights and
obligations of the Company and Employee hereunder shall cease and be completely
void except as specifically set forth in this Agreement, upon the earliest to
occur of the following: (i) the death or “long-term


 

















 


disability” of Employee; or (ii) the termination of
Employee by the Company for “just cause” pursuant to written notice thereof; or
(iii) at any time, without cause, upon thirty (30) days prior written notice.


 


For purposes
of this Agreement, “long-term disability” shall mean the disability of Employee
which prevents Employee from devoting to the business of the Company his
full-time, best efforts, skill and attention, and such condition continues for
a period of one hundred eighty (180) consecutive days.


 


For purposes
hereof, “just cause” shall include, without limitation, the occurrence of any
of the following events during the Term of this Agreement:


 


(A)                        habitual
neglect of material duties assigned to Employee hereunder which is not remedied
within thirty (30) days of receipt of written notice thereof from the Company;


 


(B)                          fraud,
embezzlement or similar act of dishonesty committed by Employee against the
Company; and


 


(C)                          conviction
of a crime classified as a felony under any Federal, state or local law with
all appeals relating thereto having been unsuccessfully exhausted and all appeal
periods being lapsed.


 


(b)                                 Termination
by Employee.  At the election of the
Employee, this Agreement shall terminate and any and all rights and obligations
of the Company and Employee under this Agreement shall cease and be completely
void except as specifically set forth in this Agreement, upon the earlier to
occur of (i) termination by Employee of his employment with the Company,
pursuant to thirty (30) days prior written notice thereof to the Company for
any reason, or (ii) termination by Employee of his employment with the Company
at any time in the event the Employee has “good reason”, pursuant to written
notice thereof, or (iii) a “change in control” of the Company.


 


For purposes
hereof, “good reason” shall mean (A) the Company has taken action that serves
to adversely change Employee’s status by a reduction in title or a reduction in
duties without Employee’s consent, or (B) without the Employee’s consent the
Company’s corporate offices are relocated to a place that is more than
thirty-five (35) miles from Boston, Massachusetts.


 


For purposes
hereof a “change of control” of the Company shall be deemed to have occurred
if:


 


(I)                                    any
person (as defined in Section 13(d) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) shall have become the beneficial owner
of 20% or more of the combined voting power of the Company’s voting securities
(other than any person who is a beneficial owner of such 20% threshold as at
the date of this Agreement), not counting for purposes of such 20% threshold
any voting securities acquired from the Employee;


 


(II)                                the
stockholders or directors approve by the requisite vote any Business
Combination; or


 

















 


(III)                            the
stockholders or directors approve the complete liquidation or dissolution of the
Company.


 


“Business
Combination” means any of the following transactions:  (x) a merger or consolidation of the Company (except for a merger
that Employee consents to and supports or a merger in respect of which,
pursuant to Section 251(f) of the Delaware General Corporation law, as now in
effect and as the same may be amended from time to time, no vote of the
stockholders of the Company is required); (y) a sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction or a series
of transactions), whether as part of a dissolution or otherwise, of assets of
the Company or of any direct or indirect majority-owned subsidiary of the
Company (other than to any direct or indirect wholly-owned subsidiary or to the
Company) having an aggregate market value equal to 50% or more of either that
aggregate market value of all of the assets of the Company determined on a
consolidated basis or the aggregate market value of all the outstanding stock
of the Company; or (z) a proposed tender or exchange offer for 50% or more of
the outstanding voting stock of the Company.


 


(c)                                  Effect
of Termination. (i) It is expressly acknowledged and agreed that, if the
Employee’s employment shall terminate at any time pursuant to paragraph (a)
above, the Company will pay to Employee or his estate any salary and bonus
pursuant to Sections 3 and 5, respectively, hereof, and any perquisites and
fringe benefits, which shall be paid proportionately to the time of termination
(which payment shall be made at the time it would be normally paid) without
further recourse or liability to the Company, except that, in the event such
termination of Employee by the Company is pursuant to clause (a)(iii), above,
or in the event such termination is at the election of Employee and is pursuant
to clause (b)(ii) or (b)(iii), above or if the term of this Agreement is ever
not renewed by the Company as contemplated by Section 2, then the Company shall
pay to Employee his then current annual base salary payable in equal monthly
installments on the first business day of each month (prorated for any partial
month) (the “Severance Payment”) from the date of such termination until the
later of (A) May 1, 2006 or (B) the second business day of the month next
following the expiration of twelve (12) months following the date of such
termination (the “Severance Period”); provided, however, that during such
Severance Period Employee shall not, within the Territory (as such term is
defined in Section 12 hereof), whether as owner, partner, shareholder
(excluding as a passive shareholder of not more than 1% in a class of
securities of any business enterprise registered under the Exchange Act),
director, consultant, agent, employee, or otherwise, or through any person,
engage in any employment, consulting or other activity which competes, directly
or indirectly with the business of the Company (as such phrase is defined in
Section 12 hereof); provided, further that in the event the Company does not
make any past due portion of the Severance Payment hereunder within ten (10)
business days of written demand therefor by Employee, then the entire remaining
portion of the Severance Payment to be paid hereunder shall become immediately
due and payable and the non-competition covenant set forth above shall cease
and be of no further effect against Employee. 
Notwithstanding the foregoing, if Employee’s employment is terminated in
connection with a “change in control” of Employer, as that term is used in
Section 280G of the Internal Revenue Code of 1986 as amended (“Section 280G”), 


 

















 


Employee is a “disqualified individual” as that term
is used in Section 280G, and such payment, or portion thereof, would otherwise
be considered an “excess parachute payment”, as that term is used in Section
280G, then the aggregate present value of the payments or portion thereof,
which are in the nature of compensation to (or for the benefit of) Employee,
which are contingent on such change in control, and which would otherwise be
considered an excess parachute payment, shall be the lesser of (x) the result
of the proceeding sentence, or (y) one dollar ($1.00) less than three (3) times
Employee’s annualized compensation which was includable in Employee’s income
and which was paid by the Company during the five (5) most recent taxable years
ending before the change in control. 
The foregoing calculations shall be made by the Company, provided that
if Employee provides the Company with a calculation thereof reasonably prepared
by an independent certified public accountant then, within thirty (30) days of
receipt thereof, the Company shall pay Employee the amount of such calculation,
reduced by the amount, if any, previously paid by the Company as the Severance
Payment pursuant to this provision.


 


(ii)                                  It
is further expressly acknowledged and agreed that if the Employee’s employment
shall terminate at any time pursuant to paragraph (b) above, the Company will
pay to Employee or his estate any salary and bonus pursuant to Sections 3 and
5, respectively, hereof and any perquisites and fringe benefits, which shall be
paid proportionately to the time of termination (which payment shall be made at
the time it would be normally paid) without further recourse or liability to
the Company, except that, in the event such termination is pursuant to clause
(b)(ii) or (b)(iii) above, then the Employee shall be entitled to receive the
Severance Payment in accordance with paragraph (c)(i) above.


 


(iii)                               For
purposes of this subsection (c), Employee’s bonuses will be determined by the
Compensation Committee of the Company’s Board of Directors, in good faith.  To the extent any perquisite or fringe
benefit that the Company is obligated to continue hereunder after the
termination of Employee’s employment cannot be so continued due to legal
impediment then, in such event, the Company shall, in lieu thereof, pay in cash
to the Employee the equivalent cost to the Company of such perquisite or fringe
benefit, with any such payments to be made at the time the payment of such
perquisite or fringe benefit would normally be paid.  It is further expressly acknowledged and agreed that,
notwithstanding the termination of this Agreement pursuant to paragraph (a) or
(b) above or otherwise, the provisions of this Section 10 shall survive such
termination for the periods of time provided therein.


 


11                                    Stock
Options.  By separate agreement of
even date (the “Stock Option Agreement”), Employee is being granted the option
to purchase up to 100,000 shares of the Company’s common stock at a price of
$0.75 per share, which options shall vest during the next two years as
described therein, with such options being exercisable during the five-year
period commencing on the date hereof.


 


12                                    Notices.  Any notice or other communication in
connection with this Agreement shall be deemed to be delivered if in writing
(or in the form of a telegram addressed as provided below) and if either (a)
actually delivered (electronically or physically) at said address, or (b) in
the case of a letter, three (3) business days shall have elapsed after the same
shall have been deposited in the United States mail, postage prepaid and
registered or certified, return receipt requested:


 

















 


If to
Employee, to:


 


Mr. George R.
Chapdelaine


20 Nicholson
Street


Marblehead,
MA  01945


 


If to the
Company to:


 


Boston Restaurant
Associates, Inc.


999 Broadway


Saugus,
Massachusetts  01906


 


and in any case at such other
address as the addressee shall have specified by written notice.


 


13                                    Noncompetition
and Confidentiality.


 


(a)                                  As
long as Employee is an employee of the Company or any successor in interest
and, if Employee’s employment is terminated pursuant to either clause 10(a)(ii)
or 10(b)(i), then for an additional period of twenty-four (24) months
thereafter, Employee shall not, within the Territory, whether as owner, partner,
shareholder, director, consultant, agent, employee, or otherwise, or through
any person, engage in any employment, consulting or other activity which
competes, directly or indirectly, with the business of the Company.  The “Territory” shall be each ten (10) mile
radius surrounding any Italian or pizza-style restaurant operated by the
Company.  The “business of the Company”
shall be limited to mean the operation of Italian and pizza-style restaurants.  The involvement of Employee with a business
or enterprise that operates restaurants that specialize in foods other than
Italian food or pizza shall not be deemed to be competitive with the business
of the Company.


 


(b)                                 Nothing
in this Agreement shall preclude Employee from making passive investments of not
more than 1% in a class of securities of any business enterprise registered
under the Exchange Act.


 


(c)                                  Employee
recognizes that the Company is and will be engaged in a continuous program of
research and development relating to its business opportunities, operating
procedures, products, methods, service techniques, engineering and
manufacturing data, machines, devices, apparatus, “know-how”, formulas, secret
processes, plans, designs, specifications, trade secrets, marketing and Company
data regarding costs, profits, markets, sales, customer lists, plans for
present and future development and acquisitions and other proprietary
information not available to the public (collectively, the “Proprietary
Information”) which gives it a special competence in its various fields of
endeavor, all of which have been or may be acquired or developed at
considerable expense to the Company. 
Employee understands that in connection with his employment with the
Company the Employee is expected to make contributions to the development of
Proprietary Information.  Employee
acknowledges that his employment creates a relationship of confidentiality and
trust between Employee and the Company with respect to information of a
confidential or secret nature which is discovered, made known to, or learned by
Employee during his employment with the Company including, without limitation,
Proprietary Information.


 

















 


(d)                                 Employee
will not, while he is or after he ceases to be an employee of the Company,
disclose any of the Proprietary Information referred to above to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever, other than in furtherance of the business of the Company or in
response to court order.


 


(e)                                  Employee
further agrees that in the event of the termination of his employment with the
Company, for any reason, or at any time upon the request of the Company,
Employee will deliver to the Company all documents and other material items of
any nature pertaining to any Proprietary Information.  When Employee terminates employment with the Company, Employee
will sign a certificate confirming that he has complied with the requirements
of this subparagraph.


 


(f)                                    In
the event of any breach or threatened breach by Employee of the provisions of
this Agreement, the Company shall be entitled to an injunction restraining such
breach.   Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies available
to the Company for such breach or threatened breach, including the recovery of
damages from Employee.


 


14                                    Entire
Agreement.  This Agreement
constitutes the entire agreement between the parties with respect to the
subject matter hereof, and all promises, representations, understandings,
warranties and agreements with reference to the subject matter hereof and
inducements to the making of this Agreement relied upon by any party hereto
have been expressed herein.


 


15                                    Governing
Law.  This Agreement shall be deemed
a contract made and entered into in the Commonwealth of Massachusetts and,
together with the rights and obligations of the parties hereunder, shall be
construed under and governed by the laws of such state.


 


16                                    Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.


 


17                                    Effect
of Headings.  Any title of an
article or section heading herein contained is for convenience of reference
only, and shall not affect the meaning of construction of any of the provisions
hereof.


 


18                                    Successors
and Assigns.  All covenants,
promises and agreements by or on behalf of the parties contained in this
Agreement shall inure to the benefit of, and be binding upon, the successors
and assigns of the parties hereto.


 


IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed in
multiple counterparts as of the date set forth above by their duly authorized
representative.


 


 


	
   

  	
  BOSTON
  RESTAURANT ASSOCIATES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:  Director,

  Member of the Compensation Committee

  



 

















 


	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  George R.
  Chapdelaine